CALAMITY HOWLER/A.V. Krebs

Gloomy Forecasts Cast
Shadow over Farmers

"It would be a disaster of a magnitude that would be well beyond
political acceptability," is the way University of Tennessee
economist Daryll Ray recently described to a Congressional committee
the future of crop agriculture. "Left to itself, it would continue
its downward spiral, bankrupting successive farmers on a given piece
of land, forcing bank foreclosures and, in general, wreaking
devastation on all rural areas."

Other studies and testimony also underscored Ray's gloomy
forecast.

Predicting that US net farm income could drop more than $9 billion
in the next two years, taking a triple hit from reduced government
payments, rising production costs, and lower prices for milk and
hogs, a report prepared by the Food and Agricultural Policy Research
Institute (FAPRI) was also presented to Congress.

"The projections represent our best estimates of what the world
would look like under a very specific set of assumptions," says
Robert Young, codirector of FAPRI at the University of Missouri, who
was chief briefing spokesperson in the presentations to the
agricultural committees of the US Senate and House of
Representatives. "The principal purpose of a baseline is not to
predict the future, but to serve as a benchmark for analyzing
alternative policies," Young says.

The FAPRI baseline is prepared by agricultural economists at the
University of Missouri-Columbia and Iowa State University in
collaboration with economists from other universities.

In addition, federal farm subsidies radiate in a vicious circle as
tax money spent to prop up farmers leads to overproduction, lower
crop prices and the need for even more taxpayer payments, according
to a study by Sparks Companies Inc. of Memphis, Tenn., a global
consulting firm whose clients include large agribusiness firms,
investment banks and government agencies.

The study said that large farmers benefit disproportionately from
the bailouts. and that the government bailout money helped skew
market conditions. "The current programs nail the little guy," agreed
Iowa State University economist Michael Duffy. "We're propping up a
system that is not working."

The Sparks study questioned the need for the $70 billion the
government has spent since 1996 to bail out farmers going in part to
large, highly efficient farm operations. Many big operators can
compete successfully in domestic and global markets on their own, it
said. If the current system of annual bailouts continues, the study
cautioned, the fruit, vegetable and livestock industries, currently
kept out of the public money trough, "will seek a slice of the
pie."

Iowa State University economist Neil Harl sees the FAPRI
projections signaling for the agricultural economy a "clear and
present danger." Farming, Harl said, "is extremely vulnerable. We
could have a replay of the 1980s," he adds.

The FAPRI annual report to Congress last week looked at 80
composite farms across the country, which are designed to replicate
real-world conditions.

The annual 10-year baseline projections, used in legislative
policy-making, show net farm income declining from the present $45.4
billion to $36.3 billion in 2002, the lowest level in a decade. That
is a decline from $55 billion net farm income in 1996, when world
grain supplies were low and commodity prices were high.

The FAPRI baseline projects net farm income beginning to recover
after 2002. By 2010, it will climb back to $45 billion, well below
previous peaks. Other projections in this baseline are that direct
government payments to producers will fall by more than half between
2000 and 2002.

FAPRI projects crop prices in the near term to average 20% below
the 1995-99 levels. The brightest spot in the outlook is a continued
increase in cattle prices through 2003.

Leading the increased production costs are rising prices for
natural gas used in the manufacture of nitrogen fertilizer, essential
for corn production. Expenses for fuel, fertilizer and other
manufactured inputs increased more than 10% in 2000. "Expenses are
expected to show another significant increase in 2001 due to higher
fertilizer prices," the report said.

On the income side, plentiful world supplies of crops keep prices
under pressure. The baseline projections are based on assumptions
that include normal weather, continuation of present farm programs,
and that government loan rates continue at their maximum levels
through the baseline period.

The Sparks study cites Census of Agriculture data that show the
largest farmers in 1997 got 12% more for corn and 16% more for
soybeans than the smallest. The largest farmers, said company vice
president J.B. Penn, "are really efficient in terms of having a very
low unit-cost structure. And nobody has paid attention to that."

Output, Sparks said, should have dropped, too. It didn't because
"as long as production is profitable at the subsidized price, farmers
will continue to produce." Iowa State's Duffy disagreed with that
piece of the analysis. Farmers boost production as prices drop, he
said, because they need to boost their incomes with higher
volumes.

Mexican Gov't Queries Missing 'Bracero' Wages

Between 1942 and 1964 nearly five million Mexicans harvested US
crops mostly in California, Texas and other Southwestern states.

Immediately after the beginning of World War II California
agribusiness interests, pleading a domestic labor shortage, sought to
make it possible for more Mexican farm laborers to enter the US.
After Mexico declared war on the Axis powers the US and Mexico
entered into such an "executive agreement" which was ratified by only
an exchange of diplomatic notes in August, 1942.

The provisions of the agreement included: Mexican workers were not
to be used to displace domestic workers but only to fill proved
shortages; recruits were to be exempted from military service and
discrimination against them was not to be permitted; the round-trip
expenses of the worker were guaranteed, as well as living expenses en
route; hiring was to be done on the basis of a written contract
between the worker and his employer, and the work was to be
exclusively in agriculture.

These "braceros" (literally "arms," the Spanish equivalent of the
English word "hand," meaning a laborer available for hire), were free
to buy merchandise in places of their own choosing. Housing and
sanitary conditions were to be adequate. Work was guaranteed for
three-quarters of the duration of the contract and wages were to be
equal to those prevailing in the area of employment, but in any case
not less than 30 cents per hour. Deductions amounting to 10% of
earnings were authorized for deposit in a savings fund payable to the
worker on his return to Mexico.

As Ernesto Galarza recounts in his epic book, Merchants of
Labor: The Mexican Bracero Story, what followed in the some 21
years of the bracero program is one of the more shameful chapters of
American agriculture and US history where laws were blatantly abused
and the program was extended far beyond the purpose for which it was
created by corporate agribusiness interests interested solely in
maintaining a cheap labor market.

The legacy of that shame has again come to public attention with
the announcement that Mexican government officials will now
investigate the alleged disappearance of millions of dollars earned
by the braceros used in the US during the war and after.

Although the surviving braceros and their families failed in their
first attempt to recoup hundreds of millions of dollars that the US
Farm Security Administration withheld from them and deposited in the
Farmworker Savings Program in Mexican farm banks, their cause has
gained momentum in the past few years but generated little Mexican
government interest.

However, in a sign of the changes since the defeat of the deeply
rooted Institutional Revolutionary Party, a point man for President
Vicente Fox said the new administration strongly endorses the
investigation. "We need to find out exactly what (is) or is not
owed," said Juan Hernandez, director of the president's office on
Mexicans living abroad, told the Los Angeles Times' Rich
Connell and Robert J. Lopez.

Galarza points out that a Presidential Commission on Migratory
Labor in 1951 noted that "in effect the negotiation of the Mexican
International Agreement is collective bargaining in which the Mexican
Government is the representative of the workers and the [US]
Department of State is the representative of our farm employers."

Finally, weary of such informal agreements during the war years
the Mexican government insisted in the early 1950s that any further
contracting of Mexican labor must be done under the supervision of
the US government. Such action was taken under what was know as
Public Law 78. The declared purpose of the law, enacted on July 12,
1951, was to assist "in such production of agricultural commodities
and the products as the Secretary of Agriculture deems necessary, by
supplying agricultural workers from the Republic of Mexico."

It authorized the Secretary of Labor to recruit such workers,
establish and operate reception centers, provide transportation,
finance subsistence and medical care in transit, assist workers and
employers in negotiating contracts and guarantee the performance by
employers of such contracts. The law also established the policy of
the Federal Employment Service "to provide for the recruitment of
workers for employment in the US ... only when such recruitment is in
accordance with provisions of an agreement between the US and a
foreign government."

But, as Galarza showed, Public Law 78 simply allowed agribusiness
to mold the law to its own purpose, controlling how many braceros it
used, how it distributed them geographically and by crops, the
economic uses to which they were put, the ways in which the contract
labor pool was manipulated, and the administrative procedures that
were devise to insure, from the industry's point of view, an almost
ideal cheap, subservient and government sponsored labor market.

Today more than two million braceros, who spent years performing
back-breaking labor for US agricultural companies from 1942 to 1964,
now find themselves well past retirement age and back where they
started before crossing the border: no pension plan, no social
security, no money.

In addition, attorneys in the US are preparing to file a
class-action lawsuit on behalf of ex-braceros on both sides of the
border. Even if the funds can't be found, lawyers hope to build a
case proving that the governments and banks are still liable.

Investigating the savings fund will be complicated by the passage
of time and the possibility that records no longer exist. One of the
Mexican banks has said it does not know what became of the workers'
savings.

While much of the controversy has focused on Mexico, under the
international accord, the US government was responsible for ensuring
that workers received proper benefits. Federal agencies were
officially the "employer" of the braceros, a requirement Mexican
officials sought to help protect the workers' rights.

Public records reviewed by the Los Angeles Times show
problems soon developed on both sides of the border with oversight of
the contracts and the savings program. Part of the oversight problems
stemmed from the limited number of Mexican government officials in
the United States to monitor contracts and work sites. "It is
impossible for these officials to meet the demands for their
services," concluded a 1945 analysis by the Pan American Union, now
the Organization of American States.

Scholars who have examined the issue, Connell and Lopez report,
say it is not clear that all of the workers' money made it to
Mexico.

"Under the agreement, employers were to deduct the funds and
forward them to the US government, along with records showing how
much each worker was owed. The monies were then to be credited to
Mexico's Central Bank and sent to two other financial institutions.
But Mexican banking officials complained that the United States was
lagging in forwarding the documentation needed to promptly disburse
the savings to workers, according to Mexican news accounts from the
period."